Bill to boost small businesses awaits debate in House

If Parliament approves a Bill that seeks to protect small businesses, firms with annual turnover of below Sh500,000 and employing less than 10 people will be registered as “micro enterprises” while those with an annual turnover of between Sh500,000 and Sh5 million and employing between 10 and 15 people will be classified as “small businesses”.
Photo/FREDRICK ONYANGO

By GEORGE OMONDI, omondi@ke.nationmedia.comPosted
Monday, October 17
2011 at
19:15

A registrar of micro and small enterprises and an authority to regulate them are among the institutions that will be created if Parliament approves a Bill that seeks to protect small businesses.

Firms with annual turnover of below Sh500,000 and employing less than 10 people will be registered as “micro enterprises” while those with an annual turnover of between Sh500,000 and Sh5 million and employing between 10 and 15 people will be classified as “small businesses”.

Also to be set up is a tribunal to handle disputes involving micro enterprises and small businesses.

These are some of the key highlights of the Micro and Small Enterprises (MSE) Bill 2011 fronted by Tetu MP Francis Nyamo to help create an entrepreneurial culture in the country.

“There has been no legal system specifically tailored to regulate these enterprises, despite the fact that they play a significant role in the economic development of Kenya and are a source of employment for a significant proportion of the population of Kenya,” said Mr Nyamo.

In the manufacturing sector, the proposed law confines “micro enterprises” to investment in plant and machinery or the registered capital that does not exceed Sh10 million or Sh5 million for service and farming ventures.

On the other hand, “small enterprises” in the manufacturing sector will be limited to investment in plant and machinery as well as the registered capital of the enterprise that is between Sh10 million and Sh50 million.

“We hope for a better-organised MSE that is able to addressing their issues,” said Kenya Private Sector Alliance CEO Carole Kariuki.

The rush to seal the legal vacuum in the management of the country’s informal business comes hot on the heels of the March launch of the Sh3.8 billion MSE Fund by Treasury to provide cheaper loans to the segment.

According to proposed law, the registrar of MSEs has a timeframe of six days to consider requests and issue successful applicants with registration certificates. Top government officials will sit on the MSE authority’s board, highlighting the importance that government attaches to the segment that accounts for 18 per cent of the country’s GDP.

The officials include principal secretaries in charge of ministries of industrialisation, trade, youth affairs and finance as well as seven persons appointed by the Cabinet secretary to represent key sector of THE economy and various interest groups.

“By having MSE players and top government officials working together at the Authority’s board, we hope there will be clear sense of direction for this sector which contributes immensely to the country’s economic wellbeing,” said Ms Kariuki.